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Rubicon Project’s Latest IPO

Posted on Thursday, Apr 10th 2014

According to a research report by ZenithOptimedia, global ad spend was estimated to grow 3.5% last year to $503 billion. Digital advertising is becoming an increasingly bigger component of the advertising market. US digital advertising is estimated to account for 21.8% of the overall ad spend of $109.7 billion, compared with 19% market share a year ago.

Rubicon Project’s Offerings
Los Angeles-based advertising automation solutions provider Rubicon Project (NYSE: RUBI) was founded in 2007 by serial entrepreneur Frank Addante. It was born as a solution to one of the largest problems publishers face today: monetizing ad space. Today, Rubicon is a leading platform for optimizing a marketplace for real time trading of digital advertising between buyers and sellers. Very simply put, Rubicon does for advertising what a stock exchange does for a company’s stocks. Rubicon’s algorithm-based solution Advertising Automation Cloud helps in transforming the process of buying and selling digital advertising into a seamless process that is efficient for both buyers and sellers. It uses machine-learning algorithms, data processing tools, and sophisticated analytics capabilities to integrate sellers’ inventory with demand side platforms into a comprehensive marketplace for digital advertising.

Rubicon has direct relationships with more than 500 sellers of digital advertising. The sellers on their platform benefit by being able to increase revenue from advertising while accessing a market of over 100,000 brands wanting to advertise. On the buyer’s side, their platform helps the buyers reach out to more than 550 million Internet users worldwide. Overall, Rubicon’s platform helps handle more than $1.2 billion in advertising dollars every year.

According to market research, the real time bidding market for digital advertising is projected to grow 57% annually over the period 2011 through 2017 to be worth $20.8 billion. Rubicon’s intelligent platform helps digital advertising buyers handle such real time bidding with higher efficiency. In a recent comScore report, Rubicon Project was ranked the leader in its market reach in the US as it reaches 97% of U.S. Internet users per month.

Rubicon’s Financials
Rubicon has seen strong revenue growth in recent years. For the nine months ended September 2013, revenues grew 48% to $55.7 million. But revenue growth has not converted to profits yet. Net loss was $9.2 million and adjusted EBITDA was $4.7 million, compared to a net loss of $4.4 million and adjusted EBITDA of $3.5 million a year ago.

For fiscal 2013, Rubicon saw revenues grew 47% to $83.8 million. Losses for the year increased from $2.4 million a year ago to $9.2 million. Adjusted EBITDA increased from $9.2 million a year ago to $11.2 million.

Till recently, Rubicon was venture funded with $51 million in funding from Clearstone Venture Partners, Mayfield Fund, Stanford University, Matt Coffin, IDG Ventures Vietnam, University of California Berkeley, Peacock Equity, News Corp, and Jarl Mohn. Earlier this month, they listed on the NYSE under the ticker RUBI and raised $101.5 million by offering 6.8 million shares at $15.00 each.  Rubicon plans to use the funds raised for sales and marketing and research and development activities.

Their stock is currently trading at $19.90 with a market capitalization of $235.9 million. It touched a high of $21.37 soon after listing last week.

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